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Squawk on the Street

News/Business. Mark Haines, Erin Burnett. Opening bell market action.

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Erin 31, U.s. 19, Us 15, S&p 9, Augusta 9, Alcoa 8, China 7, Ak 6, Aflac 6, New York 5, Rick Santelli 5, Caterpillar 5, Farrell 5, Schwab 4, Washington 4, Matt Nesto 4, Goldman Sachs 4, Barron 4, Washington State 3, Brown 3,
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  CNBC    Squawk on the Street    News/Business. Mark Haines, Erin  
   Burnett. Opening bell market action.  

    April 5, 2010
    9:00 - 11:00am EDT  

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we're seeing a lot of people putting money to work in the commodities sector across the board, specifically for nymex crude futures. we've seen long positions increase in the past week. what does that mean? a lot of times, it means that traders think prices are going higher. when you look at what happened overnight, we did get that bump-up right in the asian market, trading above that $85 mark, near $86 a barrel. we are close to that level right now, and we're also looking at prices that a lot of folks say, hey, we have not seen prices at these levels in 18 months, but where we did see prices up in these lofty levels, say back in 2008, what happened? we had the recession, and of course, many are wondering that if this idea that oil prices at these levels are because of the expectation of greater demand, is this going to then slow down the recovery that we are hoping to see because we are having such lofty oil prices? gasoline prices, when unemployment is still extremely high. erin, back to you. >> thank you, sharon. part of the reason for the move
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higher in oil is the jobs report, continued evidence that the american economy is on the mend. obviously, meaning more oil could be consumed, at least here, which is also setting stocks up for a positive open. i mean, i'm talking about the economic story here, not the crude oil. futures are pointing to a higher opening across the board for the s&p, dow and nasdaq, and there is speculation the fed could be hiking the discount rate again soon. last time they said it was nothing but a miratech kalt. a lot of people are going to keep buying that much longer. let's bring in rick santelli with us and jon hilsenrath of the "wall street journal." good to have you all with us. rick santelli, we've seen a lot of things move on the back of the jobs report and now oil, but in particular, that ten-year treasury. how important is 4%? >> well, i think 4% is important. i think how you go through it, how interest rates behave once they jump over that level's all going to be key. you know, i can't tell you how good the recovery's going to be, but i can tell you, every time it looks as though jobs are a positive, you're going to see a bigger positive in the price of
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oil and you're going to see big jumps in the price or level of interest rates. these are going to go hand in hand, even if the recoveries prove not to be as aggressive as we think as we start down that road of job creation. >> job creation. are we really seeing it yet, joe libornya, when we strip out census? >> i think we are, erin. when we look at the past three months, private payrolls have increased, although last month was the only one of any decent consequence, up 123,000. we would argue the lengthening of the workweek, continued boom in temps suggests that there will be hiring, a much faster step-up in hiring than what we've seen. we actually think the recovery is really preceding along quite nicely. >> putting this all together, jon hilsenrath, what does it mean for interest rates, whether of the fed fund sort or the discount rate sort? >> a couple things. you know, the jobs report was a step in the right direction, but i think it's worth paying attention to what was going on with wages in that report.
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they're still facing downward pressure. labor costs are facing downward pressure, meaning inflation pressures are still falling, and you know, the fed doesn't have an incentive to raise rates for a long time, and i think that's the thickening inside there. all the chatter about the discount rate, forget about it. just forget about it. the fed says it's a technical thing. it is a technical thing, and you know, i kind of doubt it's even going to happen today. >> all right. so, rick santelli, what happens to mortgage rates? >> well, i think mortgage rates, we've seen the best that we're going to see on mortgage rates, unless the government decides at some point that it wants to play the buy asset game again, qe, and i certainly wouldn't put it past the realm of possibility that would occur. but all else being equal, i think they creep up. i don't think they move up dramatically, but i think if the ten-year gets above about 4.25% within the next month or so, you'd probably see that jump a little more aggressive in mortgages. >> all right. thanks very much. joe, rick, jon. and now, here he is, the famous
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faber in place. >> i'm here, baby. don't you worry. sorry about that. we were doing some musical chairs there at the start of the show. >> that's quite all right. good to have you. >> nice to see you back from -- well, you're always somewhere, erin, but nice to see you back at the stock exchange. >> it's good to be back and have spring weather. >> yes, beautiful weather. let's take a look at the markets, starting with scott wapner at the big board. scott? >> as rick was talking about, we're watching oil, as sharon was talking about. oil at an 18-month high. so, clearly, the focus will be on energy and commodity stocks today. let's start there with some of the individual stocks stories making news this morning. alcoa kicks earnings season off next week, but it's on the move today it was downgraded, and the stock is down premarket. downgraded frto hold from buy a deutsche bank. energy prices are also down, so the cost of producing aluminum is more expensive and they think that will weigh on the numbers in the first quarter there. tesoro shares are down 4% in the premarket, downgraded also from
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deutsche bank this morning. there was a fire at a refinery in washington state. five people reported to be dead there. that stock is under a little bit of pressure premarket. arena resources, we do have a deal to talk about this monday. that stock is up 8% because it's being acquired by sandridge energy, and that stock is down 5%. the terms of the deal, $40 a share, $1.55 billion. reliant steel, meantime, got a positive mention in "barron's," which thinks those shares could double on the strengthening economy. stock is higher this morning. walgreens, meantime, march comps up 2.3% because of an early easter, though the numbers were a little bit less than expected. and lg, as we take a look certainly around the apple and the ipad story and the stocks that are getting a lift because of that -- and bertha coombs will tell you about that in a second from the nasdaq -- but lg is getting a lift because they do have a component in the ipad on. that note, let's go up to bertha coombs with a bigger story, certainly about apple and other tech stocks. >> it's the nasdaq jobs report. apple reporting it sold 300,000 in the first day alone.
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analysts think for the weekend they may have sold upwards of 700,000. credit suisse sees them selling over a million once you include the june quarter for gifts. apple right now is flat. so far it's holding in there. some of the other components, a lot of folks who bought them took them apart in terms of analysts. broadcom, one of the biggest winners in terms of it has its communications chips in there. a chip in it. dell is trading to the down side. thursday it put out a notice of accounting issues, longstanding issues they continue to talk about, but still no settlement. amazon holding up well, despite the robust news on those ipad sales. and this morning, melco crown entertainment, a company with a resort in macao, jpmorgan upgrading it saying that resort is upgrading well. >> thanks, bertha. a big price target boost for apple and fresh ipad sales
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figures for you next. >> that number's pretty amazing. we'll have details on the new report showing a second could be sec drop in pay at the top, which brings us to our street poll today. do you think ceo pay at this instant is still too high, too low or just about right, goldiloc goldilocks? vote now at squawkonthestreet.cnbc.com. tdd# 1-800-345-2550 that's why, at schwab, tdd# 1-800-345-2550 every online equity trade is now $8.95 tdd# 1-800-345-2550 no matter your account balance, how often you trade tdd# 1-800-345-2550 or how many shares... tdd# 1-800-345-2550 you pay what they pay what everyone pays: $8.95. tdd# 1-800-345-2550 and you still get all the help tdd# 1-800-345-2550 t you expect from schwab tdd# 1-800-345-2550 millions of investors. one price. tdd# 1-800-345-2550 at charles schwab... tdd# 1-800-345-2550 investors rule. tdd# 1-800-345-2550 are you ready to rule?
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warren buffett's berkshire hathaway getting another accolade. a survey puts berkshire at the top of the list of america's best regarded companies. also finishing high in the standings, j&j, google and 3m. the worst reputation -- what a shocker, david -- belongs to freddie mac. and i'm sure there are some companies who are breathing a deep sigh of relief, saying, oh, freddie got it this time. >> yeah, i know. there's any number, i would imagine, erin, that could lay claim to that title. >> yep. >> freddie mac. i wonder why freddie, not fannie, or -- well -- >> that's a good point. >> well, they have the years ahead to actually -- they can switch off each year, if they choose to. british prime minister gordon brown says the world's largest economies are close to agreeing on a global tax on banks. the ft reports it would cost the
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financial sector billions of pounds a year. brown says the uk, france and germany have broadly agreed. he hopes the united states will join them. brown is calling it a "global responsibility levy" and says he wants an accord struck at the g-20 summit in seoul this coming november. hmm. all right. we'll see. >> do you think there's any chance of that? >> well, over there, i think there's absolutely a chance of that. >> right. >> i think the key question, erin, is what, if anything, we're willing to do in terms of going along with it. we have some various taxes that we're also anticipating, although they're not necessarily calling them taxes. >> right. >> we'll see where we end up, but i do believe that there, especially given the election, brown is obviously trailing, trying, has really, at least gotten some traction with banging on the banks hard over in the uk. >> yeah. >> so, one would imagine that may happen. >> maybe it just means more business comes to new york. >> it could happen. >> there you go. >> it could happen, yeah. you know, tax rates here are
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going to be going up as well, but we can always hope. >> sadly. >> we can always hope. of course, the last thing we need in new york is more bankers. sorry. i mean, let's get some other people, entrepreneurs, something else. all right, jpmorgan raises its price target on apple to $305 a share from $240, citing strength from the company's new ipad. jane wells is in los angeles. she's got those sales numbers. jane? >> reporter: well, david, was it the second coming over easter weekend? techwise, kind of. apple saying 300,000 ipads sold saturday, a million apps were downloaded and 250,000 books, but some stores sold out, some lines were long. not everywhere, though. given the buzz, some may have gotten ahead of themselves. they were immediately trying to resell these things on ebay. i saw some going for as much as $1,500. and you didn't really need to do that. many stores still had ipads in stock, especially best buy. you could have saved yourself time at best buy. a guy sent me a photo he snapped
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inside a best buy. he and others were playing with them, but he wasn't going to buy. he is waiting like many others. "pc" magazine's lance ulinof loves the ipad, but says now comes the consumer field test. how will the screen hold up? is it going to be scratched? how do people feel about not having a camera or usb port? the camera may come on in the next generation, he thinks. i didn't hear one complaint from someone who bought them, but i heard from plenty of people on twitter who plan to wait. one person tweeted "i'm waiting for the 3g ipad version later this month, as are several friends." and this person said he "initiated a restraining order on self not to be within one mile of apple store." send me a twitter at jwells or funnybusiness@cnbc.com. we'll put them on later. if that many people this weekend spent $500, where would that money have been spent?
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are retailers maybe going to blame the ipad effect, if april numbers don't come in as expected? >> do you really think so? isn't it just an extra, something you can't help yourself from buying, doesn't necessarily replace something you would have bought? >> well, do you think that many people in this economy have $500 laying around just dshs. >> no, i don't, but i will never be shocked at the ability of the american people to spend money. >> true. >> ever. that 3g, though, what are the numbers -- right now, where are analysts in terms of estimates for the overall sales figures for 2010 for the ipad when you throw in wi-fi, and then, of course, as you say, 3g? >> well, i'm seeing maybe a million, but there are analysts estimating you could have seen as many as 700,000 sold this weekend. now, apple is just reporting numbers for saturday, which is 300,000. i know a lot of people, a lot of people waiting for 3g so they can have 24/7 connectivity, and then a lot of people, like me, i am not an early adopter, just
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want to wait, let them work out the kinks, wait for the camera to get on board, see what works and what doesn't work, how does the battery work out, all that sort of thing. they're saying that may not come out for a year. this is a story, david, that is going to come out and drag out over months and months. it's not a one-weekend deal. >> jane, thanks. jane wells. erin, back to you. >> all right. well, next, we're going to have the buzz from beyond and here before the bell. futures are pointing to a higher open. we'll see if it can hold, david, given that we've got oil maybe pushing at the other direction. and later, shares of ak steel are up over 150% from a year ago, but new policies could slow the skyrocketing stock. the company's ceo is going to join us live to discuss health care reform and the bottom line. that's right after the opening bell.
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all right, futures are pointing to a higher open. we're off the highs of the session. nevertheless, still pointing higher. part of that is obviously the repercussions or the little waves that are still hitting, ripple effect? get my words right here, david, of the jobs report. but now you've got crude rising, which is also maybe putting a little bit of a kink in things, as we trade up to the bell. those are the e-minis. let's get the buzz from beyond the big board before those bells ring, and in minneapolis, phil dowd joins us, managing director of rbc wealth management. what wins out, some of the optimism from the jobs report or some of the concern over, well, a whole lot of things that are a whole lot more expensive, like oil, like copper, like rubber? >> good morning, erin. well, my guess is the jobs report is probably a little weaker than people expected. the economic consensus is for about 132,500 per month with the number going from 9.7% to 9.3% in december, so a moderate
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improvement in jobs. to me, the ism number, the inventory numbers indicated demand was driving inventory rebuild. my guess is you're going to see a better-than-expected economic result this year. the double dip is off the table and that should be good for stocks in the longer term. >> and how good for stocks? obviously, last week we were doing our "poll of the day" on whether people thought we would be at 10,000, 11,000 or 12,000. how good? >> my target is 1,300 on the s&p. i initiated that in december. i don't change. my guess is we could be up another 13% to 14% from here to 1,300 it won't be a straight-up path. we've got a lot of divergences and traders that like to take advantage of the moves in the market up and down, but my guess is the trend is up for the balance of the year. >> 13% to 14% is a big gain. on oil, what would make you more cautious? can we afford oil, just keep trickling higher and higher, even north of $90 and still have your bullish stock scenario come through? >> my guess is $85, $90, we can live with. if we get back up over $100, you
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have economic problems, but by and large, you're seeing people replacing cars. that's a sign they're not too terribly concerned about higher oil prices at this point in time. so, my guess is, the stable prices at this level won't hurt us. >> well, it's interesting you mentioned the auto sales. there was a report in the "wall street journal" this morning saying within the auto numbers, pickup trucks, full-size pickup trucks out-performed all the rest of the sales, and obviously, three-quarters of those are usually bought by small business owners, an indicator you think's important? >> well, small businesses are where all the jobs are created, and my guess is if you can get confidence restored there and in the balance of the economy, you could see the double dip definitely off the table and more residents in corporate earnings for the balance of the year. so, it can't be interpreted badly, erin. >> phil dow, thank you very much. david faber will take an optimistic note. he thinks he can hold oil at $90 and gains of 14% for the overall market. >> we shall see, as they say, erin. citigroup is forecasting a pullback in chip stocks ahead of
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quarterly results. the analysts at citigroup says against an improving but still uncertain macroeconomic environment, the philadelphia semiconductor index at its highs with heightened earnings expectations and lingering inventory concerns will likely drive a degree of near-term profit-taking. despite that, citi said it would buy the dips, adding stocks could reach new highs in the second half of the year. ah, yes, the old highs in the second half. all right, the final countdown to the opening bell and our market panel weighs in on whether we'll see dow 11,000 this week. >> well, we're at 10,927, so that's a fair question. >> yeah, it is. if you're tired of the same old play on gold, we've got a new metal making multiyear highs. we'll tell you about some "bright" commodities after the break. we'll be back.
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you are watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell is going to ring in just over three minutes.
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we are going to have a higher open. just a couple minutes before the opening bell, futures across the board are in the green, and here are the headlines we're watching this morning. apple's top of the list. the company said it sold 300,000 ipads on its first day on sale. that eclipsed many of the forecasts out there. jpmorgan boosting its price target on the stock to $305 a share, and jane wells is reporting that 5 million ipads, according to some estimates, could be sold in the first year. an energy deal to tell you about. sandridge energy buying arena resources. the price tag $1.6 billion. arena bid higher, sandridge slightly lower. citibank and caterpillar are higher in premarket trading this morning, david. >> okay. well, erin, as we count you down to the opening bell, let's look closer at platinum and palladium, both at highs not seen since 2008. howard simons is a commodities analyst at bianco research. howard, why are we seeing both these metals at recent, or let's call it, a couple of year highs?
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>> simply, it's a story rising industrial demand not only in the u.s., but around the world. don't look at the platinum group. metals is an inflation story. don't look at them as a currency story. don't look at them as an investment for investment's sake story. you need platinum in automobile manufacturing, you need it in petroleum refining, petrochemical manufacturer. as these sectors recover around the world, it simply puts demand for platinum higher. >> you found in the past that correlation between the demand and the auto industry or sales and platinum prices was not that strong, was it? >> it's been all over the place. as a matter of fact, between 2000-2008, it was actually inverse between platinum prices and automobile manufacture, both in the u.s. and to a lesser extent in japan. it has since relinked and
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recovered. so, it's not simply a linear function. >> right. >> remember, we also have the production considerations that come into this. you have razor demand balances in both metals. you produce only a little bit more than you use every year. >> and in the 20 seconds i have left, what role do the etfs play in this market? >> a very dangerous one because they are physically delivered, and you could take supply off of the market in this balance and they could push prices significantly higher because there's no price a refiner will not pay for a platinum-based catalyst. >> got you. and you see both metals going high from here, i assume? >> definitely. >> howard, thank you for your time. erin, i see they're getting ready for that opening bell. >> yes, they are. we've got just a couple seconds away. ak steel, as you see, is going to do the honors here. we do still have that higher open across the board. and on the dow, citi and cat look like they'll be the leaders, at least right out of
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the gate. aks is the ticker, celebrating its 50th listing anniversary. we'll be talking about the steel trade in a couple minutes. at the nasdaq, the autism society in honor of national autism awareness month, doing the honors. some interesting stories out there, by the way, about people who don't vaccinate their kids, how that's causing the spread of measles and mumps in vancouver, maybe even in washington state. our market reporters, meantime, are standing by at all of the markets you need to know about. we're up just about 8 and change, 9 and change. scott? >> erin, thanks. we're about 70 points away from dow 11,000. i'm by post 8u, where citi trades. it is higher, was higher premarket as well, opened to the up side. also here because alcoa's a stock i wanted to focus on. alcoa was downgraded. it's kicking off earnings season next week, but it was downgraded this morning at deutsche bank on expectations of a disappointing first quarter. a couple things at play here. though aluminum prices are up, and that's a plus, energy prices are up as well. so that's a little bit of a drag on production of aluminum.
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energy prices very much in focus this morning as well as crude oil prices are on the move at 18-month highs there. so, we have a focus this morning clearly on energy prices, on rates as well, as rick santelli is going to talk about, certainly there as well. let's talk about tesoro. the stock is opening down. it was downgraded also at deutsche bank there. was a fire at a refinery in washington state. five people reported dead there. arena resources, as we reported, a deal this morning. that stock is higher, being acquired by sandridge energy, $40 a share, $1.55 billion. reliant steel, meantime, is another stock in focus as its shares could double, according to "barron's" on the strengthening economy. walgreens, meantime, march same-store sales were up 2.3% on an early easter. however, those numbers were a bit weaker than expected. and lg shares, watch those moving higher. certainly a lot of the components in the ipad are also going to be in focus along with apple itself, as that new device is certainly garnering a lot of attention. and on that note, let's go up to bertha coombs. let me also mention again, we're
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only about 50 points or so away from dow 11,000. take it away. >> something we're obviously going to watch. apple today seems to be -- this morning it's been on either side of the even mark. no real move. a lot of times, apple sells off when you get a big event, after a big launch. not today. good numbers, 300,000 sold on the first day. a number of analysts think 700,000 over the weekend. jpmorgan upping its price target to $305, the highest price target now is $310 on apple, but it's holding in flat. as scott mentioned, there are other winners here, component-makers, a number of folks did teardowns of the ipads this weekend and found broadcom chips in there, found cirrus logic chips, both trading to the up side. and amazon has an app on the ipad, so a lot of the e-books may have been bought on amazon as well, up about 0.5%, and amazon continues to tap that its kindle is the number one ereader. also, apple, don't forget, is still in the phone business. it's sued htc, maker of the
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androids phone, saying it will do 5 or 6 million more units in the united states, making google up higher. research in motion seeing more pressure, down 0.9%. let's go to sharon at the nymex. >> oil prices are right below the resistance level that analysts pointed out, but they also point out that there are very few resistance levels between $85 and $90 a barrel for nymex crude prices, so we'll continue to watch that very carefully. whether you think it's higher prices driving the volumes or the volumes driving higher prices, we are looking at record volumes on crude for the month of march. they announced contracts for that monthly volume. meanwhile, prices are rising from ramco as well, lifting the price for u.s. and asia for the light sweet crude. they have raises prices of those. and the other big story this market has been watching or at least talking about has been a
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story that was in the "wall street journal" about natural gas supply and the fact that the energy department may be revising downward its monthly supply data due to the fact that it had been looking at large producers and extrapolating and not really including a lot of the reports from smaller producers. a lot of analysts i talked to say they want to see what kind of trend data that produces, because of course, we have been looking at supply data that is about significantly higher than the five-year average. so, we'll continue to watch that. right now, though, it looks like the market is not reacting as you would expect, as we do look at natural gas prices weaker on the session. rick santelli, to you in chicago. >> thank you very much, sharon. we saw the bulk of the rate increase really occur for that shortened session on friday, the 2nd. and even though it was a shortened session, we traded well over $4.80 in the 30-year and over $4.95 in the shortened session in the ten-year. so we're holding those levels. but the shortened maturities, like two-year and three-year,
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they have decreased in price and caught up a little bit. we have a three-year auction tomorrow, $40 billion worth. but today we start out more with three and six-month bills and a tips, $8 billion in ten-year tips, which should be pretty popular, because everybody handicaps, why are rates going up? is the economy better? are we really going to have significant, long-lasting job creation, or is all of that going to be small compared to supply? all those areas should push rates higher. erin, back to you. >> thank you very much, mr. santelli. and a quick check on the major market averages. as anticipated, we did open higher, although barely so, and in terms of the futures, they have pulled back a little bit. so, not much of a gain at all off the top, at least for the dow, which is only up about six points. we're at 10,934 at this instant. your "cnbc edge" with noah blackstein and john lekis, leader capital ceo portfolio manager. appreciate you both being with us. >> thanks, erin. >> noah, what would you do with stocks right now, buy or sell? >> i like the market overall
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here, especially certain sectors like technology. you've got a couple risks. one is a big run-in to earnings season. so, even if the earnings come in good, does the market pull back because it's already anticipated that? and the second thing is, i think you can look at whether it's the employment number or other economic data, the fed is clearly going to back away from its extended period of time language, and i think, you know, towards the end of this year, beginning of next year, interest rates will be going higher from the fed and they're certainly going higher in the overall market. so, those are the two big risks. i think earnings will continue to drive us higher, but i think you should expect some chop over the next few months, for sure. >> chop, but you think earnings will drive us higher. >> yes. >> john, you don't share that optimism. >> well, that's not necessarily true, erin. if you go back and look at 1973 to 1976, i think we're either going to do a '75 or '76 repeat, which means we think the market in the near-term will retrace 100%, meaning the dow would go back to the 14,000 area, or if
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the ten-year moves above 4% or earnings just meet, they don't beat, we think we move into a fairly major down draft. so, it's one or the other. we're in the latter camp, but we think the market is not going to sit here and doddle around. we think it's getting ready for a major move one way or the other. >> one way or the other, okay. but what makes you -- what's going to make you decide which way? because i know you are -- at least you say you're avoiding right now, john, junk bonds, stocks, real estate, tips. what are you not avoiding? >> let me tell you, our motto is really look for a little less, keep a lot more. i think what you want to watch here, is the ten-year, which is the $3.96. if it goes above 10% and wants to hold there, that's very negative for the market. and i think you want to watch earnings here. if earnings just meet, do not exceed significantly, we think that's a bad sign and we think that will move the market lower. con trarly, if, in fact, they do beat, we think we in the
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short-run, we could very, very possibly do 100% retracement. it looks very much like 1975, '76 to us. >> what's your best idea right now, noah, on the more bullish side? >> you know, i like the technology sector as a whole. i think if you look at the secular drivers in technology, whether it's the move to mobility in smartphones, whether it's the move toward cloud computing, whether it's the amount of video over the internet driving big increase of demand that we're seeing in some of the optical component guys, as a whole, technology not only had the best balance sheets coming through this, but the secular growth drivers really i think are in place for a continued move in the technology sector overall. >> and you've been a big holder of apple for a long time and a big beneficiary of that stock's moved up. give me your take on ipad sales and what that means for the company's future. >> i think what a lot of people don't realize or don't always talk about, really, is apple is less a device company. there are many other manufacturers out there who are device companies. and when they talk about being a platform company, i think that's really the critical stage.
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you really need to add ipad, plus iphone, plus ipod touches to look at the number of devices. whether it's 75 million or 100 million devices that really are in that ecosystem of applications, that's the critical key to continued success of apple. so, the ipad just continues to further both mobility and the apple platform of delivering apps and selling music and television shows. so, i think it's, you know, the 300,000 was pretty much in line. there's still no wi-fi edition out there, and i think that will come soon, so -- >> no 3g edition. >> sorry, no 3g. and so, with that, plus a couple new macbooks and iphones before june, i think the story continues. >> thanks very much. >> all right. >> thanks. >> did you buy one yet, faber? >> no. i'm going to wait for the 4g. the 4xg, super large. >> i heard andrew ross sorkin talking. he doesn't even have a kindle yet. >> don't ask me whether i have one of those either, okay? >> that's all right.
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you like to smell the pages of the books. next, one of the largest u.s. steel makers, also one of the most outspoken companies on the obama health care plan say it will cost them $31 million this quarter. ak steel ceo james wainscott joins us. >> and executive pay falls for a second straight year. we'll break down those numbers and tell you who is leading the pack, which leads to today's street poll. do you think ceo pay is still too high, too low or just right? vote now at "squawk on the street" dot c nobs.com. national car rental? that's my choice. because with national, i roll past the counter...
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fresh from ringing the opening bell, right here is jim wainsco wainscott, chairman and ceo of ak steel, celebrating the country's 15th listing anniversary. they say they will report a charge of $13 million in the first quarter due to president obama's health care bill. we should emphasize, as the company did, that's a noncash charge. shares are up more than 150% over the past year. jim, we appreciate your being with us, and let's just get started with this health care issue. obviously, it's a noncash charge. >> correct. >> as opposed to a cash charge. so, what is the point of it? why are you taking it? what in the bill is causing it? >> erin, great to be with you this morning. thanks for having me. first off, there have been those in the administration that have claimed that we were premature and acting irresponsibly to take such a charge so quickly after the president signed the new health care legislation into law. the fact of the matter is, as you know, we're an s.e.c. registrant, we're listed here on the big board, have been for the last 15 years, delighted about
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that. we simply follow u.s. gap, and u.s. gap says that if there is a charge in the quarter that you've got to take that. so, we deemed it to be material. we reported it accordingly. some took that as a political statement, but the truth of the matter is, we don't make political statements with our accounting special charges. >> all right. point taken on that, but what was it in the health care bill that caused the charge? >> the medicare reimbursements will no longer be tax-free. there is a portion of the medicare subsidy that became effective back in 2003, and one of the ways that the new health care legislation is going to be paid for is by these kinds of things, where now it will be taxable as opposed to tax-free. so, it's the reimbursements are no longer tax-free is really the issue that caused us to take the charge. we actually reduced our deferred tax asset, is the nature of the charge, and $31 million noncash, as you pointed out. >> all right, and do you anticipate that going up over
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time? we've obviously been hearing -- i heard an analysis this morning on npr the "boston globe" had done up in massachusetts where they had said we're going to start to see costs rise in the out years. so, how far ahead does this charge take us? >> this charge really is just to reflect the change in the deferred tax asset. separate and distinct from that, however, we will, in fact, see higher health care costs for our company. we're going to be covering more people, we're going to be covering them for a longer period of time, now through age 26. undoubtedly, the pharmaceutical manufacturers, the medical device manufacturers are going to pay higher taxes. those are going to be passed through to companies like ak steel. this bill, if anything, is going to cost us a lot more money, and we're still finding out exactly how it's going to be paid for. >> okay. so, obviously, this is the first grander at what it might be. >> that's right. >> overall, how is business right now? >> business is better, but i would say to you that the road to recovery, the road to
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economic recovery is full of pothol potholes. certain segments of our business, including automotive, maybe the steel service centers have shown strength as they're beginning to buy more steel and increase inventories just a bit. on the other hand, certain other segments, including construction, are really still very poor. housing still very poor. may not have bottomed, as a matter of fact. and that's really having a detrimental effect on one portion of our business called electrical steals. but overall, i would say that things are better. in our case, we've guided that we would ship about 1,370,000 tons. to put that into perspective, a year ago first quarter we shipped about 700,000 tons. so our business is up nearly double. and the key for us is bringing people back to work when we get orders, and we've brought nearly everyone back to work. a year ago, we had 1,200 employees on layoff. as of last week, we had only 30. >> so, you're bringing people back, despite the fact that you still think we haven't seen the bottom in housing. i guess, in a sense, that's a
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glass half full way of looking at things. all right, jim, thank you very much. we appreciate your taking the time, talking about business and the health care charge, which a lot of people have focused on. by the way, it's not just ak steel, caterpillar was another dow company that said this would cost about $100 million so far. >> yep, yep, and is typically the case. as you well know, erin, shareholders don't pay close attention to any of the noncash charges or any of the special charges to begin with. i can remember ones in the billions of dollars that are largely ignored, and oftentimes, companies like to actually have those charges as opposed to just having things be considered the normal course of business. >> right. >> in part because, somehow, shareholders seem to ignore them. we'll see how it goes from here. all right, we want to bring your attention to some stocks on the move. matt nesto, i get to throw to you for a change! >> it's nice, it's beautiful. nice pass. you know, david, i'm going with the fashionably late theme here. i know erin loves to be fashionably late. i'm not sure about you, but i've got three shops out there today tweaking their estimates on
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zions bank. i tell you about zions because it's the number one stock in the s&p 500 so far this year. it's up 75%. so, it's a hold from sell. sailor o'neil and carl stewart initiated a buy at da davidson. you can see the stock is up another 3% on the news. genworth cut to hold from buy at deutsche bank. this is a super hot stock, a lot of volume lately. some of my work in that area has been flagging genworth lately. and you can see it is trying to fight this downgrade at deutsche bank here this morning. so, there's still a bid in the market for genworth. they think the stock at hold now from buy at deutsche bank is worth $19. monster worldwide, one of the worst stocks in the s&p at last check, now down 2.5%, downgraded to sell from neutral at goldman sachs. they think it is worth $14 per share. and then "washington post," cited as the most undervalued media stock in "barron's" over the weekend. it is number one in the s&p, trying to catch up quickly with the 6% pop. it's interesting, there's five
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publishing stocks in the s&p 500, and it is over the past year the worst with about a 30% move when you look at things like, well, "the new york times" up 150% and gannett up 160%. i guess it's undervalue. back to you. >> we'll see if "barron's" proves right there. they've been talking about a split-up of "the washington post" for a long time. up next, surprising new numbers on the commercial real estate market. and guess which ceo has the biggest paycheck? is he worth it? so, i guess we know it's a he. that's all we're going to tell you, david. >> probably a good guess, yeah. and 20 minutes into trading, mcdonald's and caterpillar hitting fresh highs. and the market is now up 33. tdd# 1-800-345-2550 that's why, at schwab, tdd# 1-800-345-2550 every online equity trade is now $8.95 tdd# 1-800-345-2550 no matter your account balance, how often you trade tdd# 1-800-345-2550 or how many shares... tdd# 1-800-345-2550 you pay what they pay what everyone pays: $8.95.
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in this morning's "street cap," the semiconductor industry association reports worldwide semiconductor sales rose by 56%. that's compared to a year ago, and we're now at $22 billion. from month to month, though,
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there was actually a decline, which means versus last month we were down about 1.3%. office vacancies for the first quarter, we're talking about commercial real estate now, hit a 16-year high of 17.2%. this is according to research firm reese inc. that rate is 2% higher than it was a year ago, raising concern over whether we really did dodge a bullet when it comes to commercial real estate. and in terms of the deals today, sandridge energy paying $1.6 bill krohn in cash and stock to buy rival arena resources. the combined company will be valued at $6.2 billion, david. >> thanks, erin. all right, ceo pay at the country's biggest companies trending lower for the second year in a row. mary thompson has the story. mary. >> that's right, david. in its annual survey for "the new york times," "e" lar found that even as investors averaged return in the 199 companies rose 29% last year. median ceo compensation falling 13% to just over $7.7 million. average compensation dropping
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15% to just over $9.5 million. what's behind the decline? stock and stock option grants. equilar values at the date they were issued on. many in the first quarter of last year. value them at today's prices and the pay packages might look a lot richer given the market's rebound. still, compensation consultant peter chingo says lower pay reflects the tougher line being taken by company boards. >> there's a significant emphasis on pay for performance. you have compensation committees spending a lot of time on setting targets and appropriate performance measures and validating performance against external reference companies, and in that process, they're making some tough calls. >> not everyone agrees, though. eleanor blocksom of the value alliance told cnbc she remains troubled by big bonuses, given the s&p value over the measured performance over the last ten years has actually declined. as for last year's top earners, oracle's larry ellison pulling down the most, $84 million,
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followed by boston scientific's raymond elliott at $33 million. in a year when many big t.a.r.p. recipients repaid government loans, their ceos took home big paychecks that some boards justified by the t.a.r.p. repayment. among the top or highest paid t.a.r.p. execs, wells fargo's john stumpf at $18.8 million, axp's ken chenault at $16.6 million, followed by pnc's jim rohr and lincoln's dennis glass, lincoln financial being the only firm yet to repay the t.a.r.p. money, though it says it will later this year or next. still a hefty paycheck. >> and stumpf, remember when we looked at that weeks back, wells fargo quietly topping out all the financials. >> quietly topping out and putting a lot more money in cash. his salary increased significantly. in fact, his cash salary was the highest among the ceos at $5.6 million. >> never felt too bad. ellison started the company that employs tens of thousands of people. i don't know, the entrepreneurs versus the operators, it's always a little bit of a
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different game. >> although jamie dimon would argue there are even entrepreneurs in established companies and they should be awarded in the same manner. >> he can argue that all he wants. thanks, mary. erin, over to you. all righty, next, a double dose of economic data, pending home sales and ism nonmanufacturing. compare a well equipped lexus es, to a well-equipped buick lacrosse. get inside each. and see what you find.
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welcome back to "squawk." yes, we have nonmanufacturing ism, and it improved 55.4. we were looking for 54 handle. we ended up with 55-plus. this comes from a 53.0 that was left unrevised, and prior to this, we were looking at the best headline level since july of '07. so, we now extend that. we see that interest rates are moving higher again. we're about ready to kick close to testing 4% in a ten, and the dollar index about midrange. now let's see how pending home sales fared. let's go to d.c. and diana olick. >> thanks, rick. the pending home sales index based on contracts signed in february, not closings, rose 8.2% from a downwardly revised january figure. it is now 17.3% above february of 2009, a hint at a spring
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surge is the headline from the national association of realtors. says chief economist lawrence yun, it may signal the surge this spring. the heavy home gains hits prices are starting to flatten. i'm hearing a hint of hesitancy in this, but let's go regional. fending home sales rose 22% in the midwest, up 9% in the south, but it did fall nearly 5% in the west. so, is it the impending end of the home buyer tax credit? just regular seasonal boost? again, realtors are sounding slightly hesitant, but as this good solid jump. january saw a drop, so that could be part of it. we'll have to see what the real closing numbers for spring are. david? all right, thanks, diana. what about that tax credit, where are we on that and what are your expectations? >> well, the tax credit, really we haven't seen the big boost first-time home buyers. that's what we're hearing in the numbers and antidotally. so, is it a surge from the first-time home buyers tax
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credit extension? i don't think so, because a lot of that demand was pulled forward in the fall when we saw big gains in contracts and closings. could it just be spring and the market turning around on a lot of low-priced homes? i think that's what you're looking at. >> and when you talk about turning around a lot of low-priced homes, looking at price data, given the foreclosures, despite the mitigations of the federal government, anything we can learn from this number about price? >> the price data from last week's s&p kay schiller, while it was an improvement, it was beginning to flatten off. we saw the price gains in the fall because of the first-time home buyer tax credit. we are not seeing those price gains, really just a flattening at this point, and the big worry, again, is more foreclosures. are we about to see that surge, that pig in the python, as the banks really start to work through these homes that they've been having on hold for the past couple of months, trying to get into these modifications? we're seeing the government really pushing those foreclosure alternative programs, that is the short sale program, which goes into effect today, and
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that's going to be more homes on the market. >> right. the short sale. hey, rick, you know, you do not believe mortgage rates are going to appreciably rise as a result of the fed push moving out of the mbs market, right? >> no, and you know what? there's a bit of credibility to that type of argument. if you look at the markets right now, i mean, diana's expressed that these aren't bad numbers. many believe, you know, a couple guys in the pits sold their house, so the bottom's probably in. now, having said all that, to see we're just at a 3.97, barely, it doesn't look as though the market is flinching. now, not to say rates can't go higher, but so far, still orderly, david. >> all right. rick, diana, thanks to you both. erin, over to you. >> thanks very much to you, david faber. i'm here with scott wapner. interesting, with that data, the market is holding where it was before. >> not much movement. a lot of focus this morning was on dow 11,000, whether we had
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the initiative to get there based on that pretty good jobs report. even though these reports this morning were to the positive side, not much movement in equities, as rick was talking about, and it's certainly something people are focusing on here is the movement in the ten-year towards 4%. so, we did get a little bit of a movement in that direction. so, that's being closely watched. and one of the stories i'm really focusing on this morning is the energy complex, and you know, sharon may talk about more of this on the show, but you have energy prices, oil prices at an 18-month high there. and the impact of what that could mean on corporate earnings is something to consider. in fact, we already, as we take a look at shares of alcoa this morning, we're already getting a little bit of an impact on what rising energy prices could potentially be doing to corporate profits. alcoa was downgraded today over at deutsche bank, and they see a disappointing first quarter. and even though aluminum prices were up, and you say, okay, that's a positive for alcoa -- energy prices are up as well, and that's having an impact on the production side of things as well. so, it's something to keep in mind, certainly, as we wonder
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about oil prices rising and gasoline prices and the impact on the consumer. >> of course, we'll get alcoa, as always, the first out of the gate. >> yeah, next week. >> all right. we'll be waiting for that and we'll talk to sharon in just a couple of moments. first, we want to check in with bertha, because you've got the big apple story. >> yeah. >> obviously, it was, let's just say stupendously better than expected in terms of the ipad, but is it helping the stock? >> it's not helping the stock, but you know, you've got to remember, a lot of times, apple stock sells off after one of these big events because you get such a big lead up to it and the stock runs up so high. so, the fact that it's holding in this morning is not such bad news. the headlines coming out of apple itself -- steve jobs says it really is a game-changer. they sold 300,000 as of midnight on saturday. some analysts say they probably sold about 700,000 for the weekend. i saw one person who had just bought one on saturday in my neighborhood up in boston. he had the most beautific smile. i think he didn't even take it out of the box. he was so happy to have one.
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jpmorgan this morning is upping the price target to $305, the second highest on the street. one boutique firm has it at $310. a number of others see this as a catalyst for more sales, particularly once you get the 4g ones coming out, the ipads coming out later on this month. meantime, some of the others that are now part of the apple ecosphere, folks who did the teardown this morning took apart the ipad and found inside chips from texas instruments, broadcom and cirrus logic. all higher. cree is among the communications chips on a new high on an upgrade at ubs. also at a new high today is netflix, which was the number one app, the free app downloaded for the ipad over the weekend. and the imax continuing strong sales of the 3d movies, and webmd this morning being upped over at goldman. erin, i don't know, once those 3gs hit, i'm wondering just how bad it's going to be for your iphone and for your at&t phones here in new york city.
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>> that's a tough question. all right, thanks very much to you, bertha. we've been talking a whole lot about energy prices and what the surge in oil prices could be doing to corporate profit. as promised, let's get to sharon epperson now, who has more on that. sharon, north of $85 and holding. >> north of $85 in the may contract and we're looking at summer prices above $86 a barrel, by the end of the year, close to $808 a barrel and prics seem to be trending higher from the volumes we've been seeing as well as from the technical data we're looking at here. keep in mind as well, a lot of folks, particularly goldman sachs, among the investment banks saying we could go into backwardation soon, and lift prices higher. right now we're looking at a contango situation, which means the prices at the front of the curve are lower than those at the back of the curve. what that means is if you're a long-term investor in commodities or oil, is that you're not getting the same type of return that we've seen so far
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this year. oil prices, oil futures up over 7%, and meanwhile, we're looking at the gsg, that etf that tracks the goldman sachs commodities index barely making a gain. so, if you're wondering why, it's because of that contango situation and they make an interesting point. in order for you to see a significant gain in that commodity, etf, you're going to have to see oil prices above $90 a barrel. so, that's something that we're watching as well. metals, meanwhile, are higher, slightly higher, holding steady here. the london metals exchange is closed today for easter monday. the real standout, though, seems to be palladium. palladium futures hit a two-year high, and that means the palladium etf which launched in january is up 14% so far this year. auto industry is definitely helping that with the catalytic converters and particularly the auto use in japan helping the buying there for platinum futures and that platinum etf. erin, over to you. >> thank you, sharon, and now to david. with the first quarter of 2010 in the books, we are taking a look at some of the etfs
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winners and which ones to watch in the second quarter. tom widen is editor of etftrends.com. all right, tom, what should i be focused on here in the second quarter? >> well, in the second quarter, david, you know, consumers have had a lot of restrabt so far with the recession, but now with these economic numbers looking not much better, the power shares leash your and entertainment etf is poised to do very well. you know, weather's nicer, fast-food restaurants should be doing better. advertising sales are going to continue to increase. companies like liberty entertainment, wynn resorts. vegas is starting to show little bit of signs of life. so, that's something to consider. there's a lot of talk about industrial materials. so, the spider metals and mining etf. the idea here is rather than buying the spot gold or silver itself, buy the miner, because for example, gold, it takes $275
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to get that ounce out of the ground, selling for over $1,100 an ounce now. big profit margin that we as consumers can benefit from. and then finally -- >> go ahead. >> go ahead. well, finally, all eyes are on south africa. we've got the world cup coming up this summer, and south african banks, metals and miners there as well, energy companies, they are just coming out of their first recession in over 17 years. so, i think they're also poised to do well and they're going to get a lot of attention this summer. >> do you recommend these etfs because you believe, ultimately, that people will start to look to them to get exposure to these areas, not necessarily because the areas themselves will start to perform well? >> well, what we do at etftrends is we're looking at the trends, and all these etfs are above their 200-day averages. they're also from a fundamentals standpoint the stocks and the underlying stocks in these areas are doing well based on economic
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conditions. so, we've put the technicals and the economics together, and based on our analysis, they are poised to look to do well in the next quarter. >> what do you -- i know on etfs, there are some that are, you know, double short, triple short, triple long, and there's a real correlation problem there. is that a warning sign that you send out to some investors who look at etfs? >> absolutely. there's been a lot of discussion about inverse and leverage etfs. you have to know what you're buying. and again, for some that are looking to hedge, they're appropriate over short-term periods of time. they do exactly what they're supposed to do. however, over extended periods of time, they're not for the average investor. and they're built to provide that leverage sometimes double or even triple leverage. >> right. >> but they're not for everybody. >> they should be viewed as trading vehicles is what i hear you saying in a sense. >> absolutely. that's absolutely -- >> not for long-term exposure to these industries you're talking about if you want to actually make a fundamental bet on a
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particular sector? >> that's right, and these recommendations we're making, these are not leverage etfs. >> right. >> these are diversified groups of stocks in certain sectors or asset classes. >> all right. tom, thanks for the picks, appreciate it. tom lyden. erin, back to you. just ahead, david, the president's big gamble on housing. the new foreclosure plan has a big price tag. it has some risks, but will it pay off where so many other efforts have failed? then, stocks in v-shaped mode since last march. will we see 11,000 on the dow this week? it could be today. we're not particularly far. 4% on the ten-year, how about that? well, farr and farrell will put your money to work. plus, oil hitting $86 a barrel. is it the start of a new bull market or just a blip to the up side? we're going to take a look. as we head to break, some of the morning's biggest movers.
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about 45 minutes into the trading day. stocks, as you see, starting the week on an up note, coming off five consecutive weeks of gains. caterpillar and intel are leading the dow higher. both of those up about 1% today. harley-davidson higher by about 5%. rbc raising its price target to $36 from $32. and us steel, occidental
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petroleum and altria hitting 52-week highs. >> which stocks are sticking out? matt nesto has the "realtime flash." >> i'm going crazy led zeppelin on you. l.e.d., baby. light-emitting diodes. this morning, cree raised to buy from neutral at ubs. they think the stock is headed to $92 a share. they love the growth in the l.e.d. space. the stock surging here today, number one in the russell 1,000, up more than 8% as i speak. a $8 billion market cap for this company that kind of gets pushed aside in the semiconductor space, in certain circles, all due respect to them. the stock is at a ten-year high, no disrespect there. forest labs is getting hit pretty hard this morning. second worst performer on the s&p 500. the fda says their daxis lung treatment trials showed their performance was quite modest.
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it treats chronic obstructive pulmonary disorder. of particular concern, though, were three suicides and two attempted suicides in their studies. there will be a panel ruling on wednesday. keep an eye on forest labs. dean foods, another day, another rebound, an early surge, selling off a little bit here today. the stock is at a two-month high here today. whether or not it will remain independent is anybody's guess, but the market does seem to get torqued up on this rumor every week or so, it seems i'm talking about it. it was up 2.5%, now up 1.8%. and lastly, let's see wynn resorts. did we get through $80 since last -- hey! we're above $80! wynn resorts breaking out an 18-month high. the south china "morning post" is reporting that macao casino revenues were up 42% in march. so, anybody with a link to those casinos, which includes wynn, is doing well this morning. >> so, i assume sands is also doing fairly well, then? >> you assume correctly.
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>> las vegas sands. thanks, matt. >> you got it. as we just reported, a fresh read on housing contracts for pending sales of previously owned homes unexpectedly rose in february. the national association of realtors says the rise may be attributed to home buyers taking advantage of a soon-to-expire tax credit. you heard diana olick talking about that. the index rising 8.2% to 97.6 from a downwardly revised $90.2 in january. ism non manufacturing index at its highest level since may 2006 at $55.4, versus a $53 reading in february. erin? >> and we're at highs. it may sound meager, but approaching the 11,000 mark. gm says it's expanding the use of "brake override technology." they say they're going to have that in all of their cars by the year 2012. now, what this will do -- obviously, this is linked to the whole toyota situation -- is it's going to reduce power to engines in cases where the brake and the accelerator are pressed
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at the same time. the announcement comes at a time when toyota continues to battle negative publicity over its recalls of cars involving reports of unintended acceleration, david, some of which we know were linked to the brakes and others of which were not. >> yes, possibly driver error. >> right. all right, treasury secretary tim geithner delaying a report on whether china is a currency manipulator. it was originally due out on april 15th. geithner says he'll use g-20 meetings and a u.s./china strategic dialogue in beijing to urge china to budge on the yuan. very important, obviously. last week, china announced president hu jintao will attend a nuclear securities summit meeting in washington on april the 12th. and obviously, the decision made not to muddy the waters there, as we hope to get some cooperation from china on iran. for example, by pushing them all over the place on currency. but certainly a very important issue and one that will come up again at some point, right, erin? >> well, that's for sure.
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>> yeah. starting today, underwater homeowners will be able to sell their houses for less than they are worth. is it a good idea? will it work? is it another sign of what some are calling the nanny state? and later, tiger woods returns to golf this week, in case you've been hiding under a rock, david. he'll be competing at the masters in augusta. but before he tees off, reporters get a chance to take their swings. watch tiger's news conference live on "street signs" at 2:00 eastern. >> by the way, you wouldn't sell your house for less than what it's worth, you would sell it for less than the mortgage is worth, right? >> exactly. >> i think there was a word left out there, yeah. the mortgage. all right, here's a check on the dollar before we come back in two minutes.
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today, another part of president obama's housing plan goes into effect, the program that will let underwater homeowners sell their homes for less than they owe, and basically force the lender to take the loss rather than foreclose on the home. so, what does the plan mean for homeowners and lenders? well, let's ask sherry olafson and susan wapter at the wharton business school. susan, there have been any number of attempts, of course, to forestall the growing wave of foreclosures, to get some stabilization in the housing market. is this plan going to work in your opinion? >> this plan will certainly
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help. what it helps by is getting those transactions to occur, that all the parties want to get to occur, but there are just so many barriers to making it happen. this facilitates it. >> even though in the past they've also dealt with problems of securitization, meaning it was unclear who held title to the home or the mortgage, i should say, and getting the requisite approvals from all those underlying lenders, if you will, have made it very difficult to get foreclosure mitigation. does that continue to be a problem, sherry olafson? >> well, there have been some lawsuits, but some of these solutions like the hampe solution or this program account for that with the net present value test and other litmuses that are really in the investor's best interests to begin with. these are not programs where people automatically get a free modification or a free foreclosure -- i mean, short sale or deed in lieu. these are programs where the lenders or servicers are weighing which is the best alternative for the investor? and if it's not going to net the
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investor more money, they're not doing them. >> i see. do you think any of the programs to date have been a success? >> we know that the h.a.m.p. program didn't work, and it's very interesting, because this time last year, the administration was saying we are going to save 9 million home overers. we are going to keep them in their homes by modifying their mortgages and somehow magically making their homes affordable. this year now, what we're hearing is that's not really an option. so, now what we're going to do is we're going to get them out of their homes in the least damaging, most efficient manner possible. >> susan waechter, we seem to -- obviously, there's a lot of hope in terms of the ability of these plans to really stabilize housing. do you think this is the one that truly does it? >> i think it does move it a long way towards that. you know, the fundamentals are what ultimately matter, and the fundamentals should be hitting in, in a good way. that is, employment beginning to grow again, hopefully, interest rates staying down, but this is going to help. >> who's going to make the decision here? i'm just curious. to see if it's going to be
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successful. is it the person who's currently in the home, is it the bank, the servicer? because it seems the answer to that question will determine whether this works. >> well -- >> erin, very few people actually -- go ahead, susan. >> well, to start with, they -- the banks are now going to be on the line to offer this across the board and to offer it at a price that they agree with to begin with, so, the transaction's part of this. you can imagine it's a mess in terms of who goes first, just as you say. but the process is being clarified. that's important. >> and shari, it seems like that is really important, so we know that. everyone seems like they're just going to kind of sit there and stall. >> exactly. >> yeah, well, erin, this program really only applies to certain people. so very few people are really going to be eligible for it, but what it does is it sort of primes the banks and servicers for offering a program like this more globally to other people, and it provides a framework in terms of the documents, the timelines, and how the deficiencies and the credit ratings will be dealt with and also junior lien holders, which
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has been an obstacle to short sales and deeds. >> right. the junior lien holders. shari, some says there's shadow inventory of 7 million foreclosures out there, conce e conceivab conceivably. how much of a dent can this really make in that possible number? >> that -- david, that's a great question, and here's the important thing about happena starting today, i think, is that last year, remember, the administration was saying we're going to keep 9 million people in their homes? we know the h.a.m.p. modification didn't work, so by definition, we know those 9 million people are still wondering what they're going to do if we're going to add 9 million homes to the inventory by deeds in lieu of short sales, what that means is rather than keeping those people in the homes, we're putting those homes into the inventory, and this is going to be another two or three years before it works its way through the system. >> all right. >> i agree. >> we need housing. we certainly need it if we're going to have a sustained economic recovery. thanks to you both. shari ole yefson, susan wachter.
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erin, back to you. >> farr and farrell, both have seen the market ups and downpours. we have key advice on anyone making that bet on when we cross 11k. and oil breaking out of its trading range. will $100 a barrel be here by the summer? what it means for the markets and for your investments. but first, this morning's weakest dow stocks. take a look. not too bad, huh? and let's take a live picture of the white house easter egging roll. now, that looks like fun. >> it looks like a gorgeous day there. >> oh, beautiful. investors are demanding more for their money. good. this time, i'm watching fees like a hawk. i hate hidden fees. why should i have to pay for something that i shouldn't have to pay for? td ameritrade's pricing is clear and it's straightforward... it's spelled out upfront. no hidden fees... no bait and switch. no gotchas. and there's one flat rate for online equity trades... for big accounts... or small ones. that's the way it ought to be.
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and a news alert right now, as we welcome you back, on crude oil, at the highest level of the session. we'll get that chart up, if we can. right now we're north of $86 a barrel. that's a gain of about $1.25 a barrel, and that's up 1.5% surge for the day. in terms of what it's doing to the overall market, stocks still near the high of the session, up about 42, and we did get some better-than-expected economic data in housing. pending home sales up more than expected, 8.2% in february, thanks in part to the expected end of the new home buyer tax credit. and the services sector grew at its fastest pace in nearly four years. that's the ism services index, and it came in at 55.4 for march, david. all right, well, let's take a look at the markets and their internals. you can see the dow and nasdaq and s&p, all the averages, of
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course, up, as we've said many times. the dow flirting with the 11,000 mark, the s&p, as you see it there, 1,184, up a little over 0.5%. advancers out-pacing decliners by a significant margin. 135 stocks unchanged. as for the nasdaq, similar ratios in terms of advancers versus decliners, and there you have a look at how many of the stocks on the nasdaq are unchanged. erin? all right, david. well, stocks in v-shaped mode since the march lows, 75% up from a year ago. this morning, the dow just 20-plus right now -- yeah, 10,968, so about 30-something points from dow 11,000. farr and farrell are here. michael farr, president of farr, miller and washington, and vince farrell of soleit securities. good to have you here. oil is going up and up and up, coming right through to the
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pump. and jon hilsenrath said earlier you're still not seeing improvement in wages, even though you were in terms of the payroll number. are we going through 11,000 and how quickly, vince? >> yep, you're going to go through it, and i wouldn't be too worried about oil, erin, because that's reflective of a better economy. on the wage side, if they're doing multiplication from the jobs numbers on friday, take the fact that hours worked were up, even though the average hourly wage was down, hours worked were up more, so just for that one picture, wages increased on an annual basis of 3.9%, which is a better rate than we've had in some time. so, i'd take encouragement from that. >> but there's not a lot of wage pressure right now given the unemployment rate. with a 10% or near 10% unemployment rate, you've got people who are willing to work for the same rate. you don't have to give people raises right now. >> well, that's why i'm not worried, michael, about the inflationary pressures of oil, because you have such capacity available and you have no wage pressure at all. and most of the pressure on
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inflation comes from wages, not from commodity prices. so, i wouldn't be too upset with the fact that oil's up a little bit. >> at what point do you get worried about oil, vince? >> $100. >> at $100. so, we have another -- you can go $15 more. at $100, that's going to matter? >> it's making me nervous now, erin. and erin, you know, as long as mark's not here, do you see that we really want to hear from you? [ laughter ] don't tell him, shh! >> i know, i actually got in here. so, what do you do ahead of earnings season, though? i mean, in terms of what do you think's going to go up the most? i know you guys always have names. you don't always get to them, so go ahead. >> i'm going to start with monsanto. i mean, if the world population's going to double by 2050, this is a multinational company, only about 55% here in the u.s., and i think the genetic seed and trying to figure out how you're going to feed a whole lot more people will have a profound influence over the next coming years, given the demographic expansion. so, at 15 times earnings, i
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think monsanto's strong. the price is depressed because roundup went off a patent that was a very big chemical for them. so, i just bought a little bit and i'll probably add a little bit more. but as i think about, you know, vince's note on the market that i saw over the weekend, i agree with vince, too, that you know, after a 75% run-up, you're due for some sort of a pullback, and you don't, you know, it doesn't make a lot of sense to ignore gray hair all the time. >> yeah. you know -- thank you for the gray hair, michael, but because i am concerned very short-term about a little bit of a pullback, i'll stick with something, erin, that's really sort of a value play, a book value play, and that's allstate insurance. trades below book value. we think book by the end of the year will be $38, trading at about $32 right now. what's called the combined ratio, the amount they lose, is 94%, but the industry was 104%. so, that gives them a pricing umbrella, and they're going to be able to either raise prices and/or get market share, and i think they're very well
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positioned, trading at only seven times earnings, below book value. plenty of extra cash on the balance sheet. i think they'll have extra purchase. and i'm worried the market could set itself back a few percentage points because it needs today and we agree with monsanto. we would endorse michael's position on it. >> thank you very much, farr and farrell, the dynamic duo. >> thanks, erin. all right, erin. in today's "street poll," we want to know if you think corporate executives are paid too much, too little or just about enough. logon to "squawk on the stree squawkonthestreet.cnbc.com to vote. results, of course, at the end of the show. and just ahead, oil piercing $86 a barrel. piercing. what an image. right now the range it's been stuck in, everyone's worried, you heard from farr and farrell on $100. is that going to be a reality? >> man, i remember having that conversation, what was it, two years ago?
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when did we hit $140 a barrel? >> summer of '07 or -- >> was it '07 or '08? >> i think it was july '08, yeah. >> july '08. getting old. can't remember all these dates. also this morning, tiger day at the masters. the star golfer who's had, you know, a couple of troubles you may have read about, he arrives in augusta. we'll take you there a little later. but first, this morning's 52-week highs. compare a well equipped lexus es, to a well-equipped buick lacrosse.
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sun life financial should be famous. we're working on it. so you're seriously proposing we change our name to sun life valley? do we still get to go skiing? (announcer) sooner or later, you'll know our name. sun life financial.
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you're looking at new york, but i'm jane wells with today's "west coast wake-up." that 7.2 earthquake south of the u.s. border was widely felt and lasted up to a minute. some geologists say that kind of quake could put stress on other faults, like maybe the southern
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end of the massive san andreas fault, which the "san diego tribune" reports has not ruptured in more than 300 years. last year, the big three ceos were chastised for flying corporate jets to washington to ask for money. hey. that was then. executives from some of the nation's largest firms have increased spending 9% this year on the personal use of corporate jets, according to the "l.a. times." a berry good year for fruit lovers. the market is flooded with strawberries as a weather delay and harvest in florida coincides with the harvest in california. 80 million pounds of strawberries were picked last week. that is a record for this time of year. get me some shortcake. and finally, is he bach? hollywood is a buzz, a little, that governor arnold schwarzenegger may return to his old job once he says hasta la vista baby to california. there is a trailer for an upcoming movie called "the expendables." the governor has not said what his plans are, matt nesto.
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now "stocks on the move." i'll be back. >> and we'll love every minute of it, jane. she talked about the corporate airplane upticks. ceos will have to ask their partners to chip in for gas because of the rising price of crude as we race towards it looks to be $90 a barrel, has the airline index hurting today. almost all 13 members are trading lower, amr, delta, all pretty weak. interestingly, the railroads and trucks are holding up very well here today. but amr among the worst. pulte loving that pending home sales data. all 13 members of the supercomposite homebuilders index rising this morning. pulte's up almost 4%, as you can see, on the news. very strong. this snaps a four-day, 5% slump that we saw last week in the homebuilders. david? >> all right, thank you, matt nesto. well, on the upswing again this morning, yes, oil. price update $86 a barrel. could we see prices get up to
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$100 or perhaps more this summer? addison armstrong is director of market research at tradition energy as well as a cnbc contributor. and kyle cooper is director of research at iaf advisers. kyle, let me start with you. you know, it's funny, we've been in this sweet spot. we haven't had to talk about it that much, in the 70s. am i going to be spending a lot of segments now talking about $100 as we head into summer and the possibility of it or is it just going to happen? >> it certainly looks like it. the momentum is clearly to higher prices, despite inventory data that remains, in my opinion, relatively bearish and certainly not overly bullish with u.s. inventories very adequate and demand levels here in the u.s. still pretty lackluster. the fundamentals, in my opinion, don't support the higher prices -- >> so, why are we going to see -- if the fundamentals don't support them, why are we going to see them? >> because the prices continue to move higher, the money flow is there. it's on the expectation that china and the rest of the world is growing faster than the u.s. while the prices are very adequate, it's the anticipation
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and the hope or the fear that supplies won't keep up in the future. >> addison, are we going to start having conversations again about the role of speculators in the oil market? >> well, you know, the speculators never really left the oil market. after all, when the market was going down, they were shorting it as well. so, you know, i'd discount all this talk about speculation, generally, because you know, they're always a factor in the market and they are the marginal factor in the market, let's face it. and i certainly, there is, i would say right now, and certainly this move we've seen from $70 up to $85 and now with little to stop us from going to $90, this is a speculative play. it's based on the moves in the dollar, it's based on what's going on in equities. and remember, these are markets that discount the future. they're looking at a time when things are a rosy scenario. but i'm with kyle. you know, certainly here in the u.s., the inventories and the demand situation is not indicating at all that prices are going to stay at this level. and what i'm more concerned about than anything is that high
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prices are going to crimp this insippent economic rebound that everybody's talking about that we've seen in the ism data on thursday and then in the services sector data this morning. i'm really worried about that. >> you each talk about concern about the u.s. situation. i'm curious what we should be looking at. you know, in saudi arabia last week, the head of investments was telling me china is now the biggest purchaser of saudi crude and indian purchases of saudi crude have doubled over the past year. doubled over the past year. it's pretty incredible. i know it's interesting to say the united states does not matter. that would be hyperbole, but how much does the american inventory and demand matter for setting crude prices addison? >> i would say given what's going on recently, i would say it's not the element that sets what's going on, but i would say, you know, the corollary to this would be economy growth and indian growth. if the u.s. and western economy doesn't turn around and the consumers in these nations start
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buying goods from china and india, there's a limit to how big china and india can grow. look, i know all the arguments about the chinese domestic situation and how big that economy is and has the potential to be, but at the same time, you know, they're dealing with their own issues there in terms of fears about bubbles and inflation and real estate markets that are not sustainable. so, you know, this could all end badly, you know. we could see prices move back down to $65 if the right circumstances came to the marketplace. >> guys, i want to end on one note, a question. i just want a number from either of you. if israel were to attack iran's nuclear installations, where's the price of oil the next day? >> kyle, you want to take a shot at that? >> sure. i mean, easily, i think it's over $100 a barrel. but keep in mind that the u.s. government, along with other european governments, has stockpiled huge amounts of crude, and i do not believe iran has the capability to shut off exports for very long. i think the u.s. navy would open up the straits of hormuz very,
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very quickly and oil would be flowing very, very quickly. but $20, $30, maybe $40 bounce is not out of the question. >> addison, you got an opinion on that? >> i absolutely agree it would be a short-term reaction. saudi arabia has about 5 million to 6 million barrels a day of spare capacity that would more than make up for any oil lost from iran being out of the market. >> all right. well, hopefully, it won't come to that, but we'll keep that in mind if it does. addison armstrong, kyle cooper, thanks to you both. erin? well, just about 15 points -- we're at the high now, david, up almost 60. 10,985, 15 away from dow 11,000. you've got cat, ge, ibm all gaining. we'll look at some movers on the beaten path as we see if we can get there. >> all right. first though, far off the beaten path to the cart path. darren rovell's live at augusta. >> reporter: yeah, david, you know, augusta national could make a killing off this week's
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masters, but they won't, and we'll tell you why, next. now let's go to trish to find out what's going on on "the call." >> well, indeed, i am looking forward to that. meanwhi meanwhile, at the top of the hour only on "the call," we'll talk about what the fed's latest thinking on inflation actually is. there's an internal debate here, and steve liesman's got both sides of this equation and we discuss exactly what inflation means for interest rates and for this economy. ak steel, the latest company to take a major write-down as a result of health care costs. as a result, we are discussing today whether or not obamanomics is the best thing for corporations right now. and as oil creeps towards the $100 barrel level, we're going to talk with a five-star fund manager on his commodity plays, find out what he's buying right now. we have it all ahead on "the call" at the top of the hour. first, "squawk on the street" is back after this break. whwhwhwhwh
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dow winners are topped by caterpillar, ge, utx, chevron, axp all to the upside. 10,984. approaching or closing in on 11,000, david. >> thank you. with tiger woods coming back, augusta national, the host of
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the matters, could be making a fortune off the event. but our darren rovell is live in augusta to tell us they won't, because they just don't want to. >> reporter: yeah. that's right, david. first let's get you to tiger. he appeared on the course here at augusta national at around 8:00 a.m. practicing with fred couples. a couple cheers. a lot of quiet. no real boos. no real hecklers or detractors, so to say. it's hard to say during a practice round exactly how hard -- how good he's doing, but odd makers still have him as the favorite. back to that capitalism thing, augusta national, they have no interest in making money. case in point, they only have three sponsors. those sponsors exxon, at&t, ibm. how about maxing out the broadcast partners in espn and cbs. they don't do that either.
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they only allow four minutes of commercials to be run per hour. they also limit the broadcast hours more than any other. then there's the tickets. they could sell fewer than they could at the face value to long-time patrons and haven't had a public sale since 1972, forcing outsiders to go to secondary ticketing sites to get their way in. and you'd think, you'd think they'd make a buck off concessions. no. check out these prices. a bbq sandwich no more than $2.50. a dollar for a muffin. less than three bucks for a beer. they don't want any part of the money they could be making for what is probably going to be the greatest masters ever in terms of attention, especially if tiger makes that cut or is in the final pairing on sunday. we'll have more obviously throughout "power lunch" leading up into "street signs" at 2:00 p.m. tiger woods will be speaking live at a press conference here at augusta. back to you. >> obviously the news conference there. i know you'll be there. you'll be with us because it's
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live on "street signs" 2:00 eastern right here on cnbc. he does look different with that -- >> little thing going on there. >> yeah. >> is darren a big supporter of commercialism? is that what i'm supposed to believe from that report? >> reporter: i am. i am. >> you are. okay. >> reporter: i'm for america. i'm for capitalism. i'm for making money. it just seems weird traditi. tradition, but this is just weird. $2.50 for a beer? everyone else charges $7. they could raise it a little bit. >> nice green jacket. 6 stocks in 60 seconds up next. there's still time to vote in the street poll. do corporate executives get paid too much, too little or just enough? we'll have the latest results in just a moment. boss: so word's gettin' out that geico can help people save in even more ways -
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on motorcycle insurance, rv, camper, boat insurance. nice work, everyone. exec: well, it's easy for him. he's a cute little lizard. gecko: ah, gecko, actually - exec: with all due respect, if i was tiny and green and had a british accent i'd have more folks paying attention to me too... i mean - (faux english accent) "save money! pip pip cheerio!" exec 2: british? i thought you were australian. gecko: well, it's funny you should ask. 'cause actually, i'm from - anncr: geico. fifteen minutes could save you fifteen percent or more on car insurance.
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in today's street poll we asked if you think corporate executives get paid too much. 80% of you, is that 80% or 90%? 90% of you, excuse me, said, yes, pay is too high. 3% said too low. guess we got some ceos watching.
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and 7% said just right. i suppose that's not a big sur prize. time for six in 60. i start today. monster worldwide downgraded to sell from neutral at goldman sachs. smithfield foods upgraded from neutral from underperform. harry winston diamond. stocks up 8%. did you know they were public? >> i had no idea harry winston was a publicly traded company. alcoa. stock is up. evs upgraded to out perform from market perform at bmo capital. firm also increasing its price target to 20 from something
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lower. stifel financial gown graded to market perform from out perform. downgraded based on price. bye-bye. good morning, everyone. welcome to "the call." i am trish regan. i'm here 90 minutes into trading here at the new york stock exchange. we have stocks marching slowly toward 11,000. we're going to discuss whether or not this tortus rally can continue. i think there's a very good shot we're going to see 11,000 within the next hour of this show. >> good morning, trish. i'm larry kudlow. melissa francis is out today. if the economy is, in fact, improving, how will that impact the fed's strategy on interest rates? steve liesman will have the latest. plus, as more and more companies write down millions for increased health costs, we'll discuss whether obamanomics is bad for u.s. business. >> i know what you think on that one. >> this is "the call." we are cnbc. all right.
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good morning, everybody. stocks are getting an early boost from friday's employment numbers then further support from better than expected pending home sales and very good ism nonmanufacturing report. the service sector growing at its fastest pace sense 2007. pretty much across the board up at least a half a percent. dow moving towards 11,000, as you can see. one surprise this morning is that oil is up again very substantially, almost 2%. $87.50. the u.s. greenback is slightly lower. the gold price is basically flat. you can see we've got a handsome rally going. i will bring it down to trish regan. what's going on? there's upward movement. there's a strong economy. there's good isms. what do you have, trish? >> a handsome rally, indeed. with 11,000 quite in sight. about 21 points away or so, larry. you're right. the economic news is very positive today. also investors are breathing a certain sigh of relief after friday's jobs report, adding 162,000 jobs t